The Joint Contracts Tribunal (“JCT”) recently published new 2024 editions of the Design and Build Contract family (“DB 2024”), Minor Works Contract family (“MW 2024”), Intermediate Contract family (“IC 2024”) and Standard Contract family (“SBC 2024”) (together “JCT 2024”). This note explores the key changes from the JCT 2016 editions (“JCT 2016”) whilst focusing on practical tips.

Summary of the key changes

None of the changes made by the JCT 2024 to the JCT 2016 materially alters the risk allocation between the Employer and the Contractor. Some of the changes deal with matters that are often incorporated as amendments to the JCT contracts.

Modernisation

The notices provisions now allow for notices, communications or documents to be sent by email. However, notices related to default or termination can be sent via email only if the parties selected this provision to apply in the Contract Particulars (“CPs”).

Although key notices are deemed received on the next business day, the JCT 2024 are silent on when general notices (such as payment notices) are deemed received. Parties may therefore wish to clarify this in a schedule of amendments to the JCT.

A very welcome change is the use of gender-neutral language and provisions for the contracts to be signed electronically.

Supplemental Provisions that are now general obligations

The previously optional Supplemental Provisions on collaborative working, sustainable development and environmental considerations, and notification and negotiation of disputes, are now general obligations:

• Collaborative working: the parties are now required to ‘work with each other and with other project team members in a co-operative and collaborative manner, in good faith and in a spirit of trust and respect’.
• Sustainability: the Contractor is now encouraged to suggest environmentally beneficial changes to the works, and shall provide information on the environmental impact of the supply and use of goods and materials selected.
• Settlement of disputes: to encourage early resolution, each party must ‘promptly’ notify the other of any matter that is likely to give rise to a dispute. NB.: this is without prejudice to the right to refer a dispute to adjudication at any time under the Housing Grants, Construction and Regeneration Act 1996 (“Construction Act”) and it is not stated to be a condition precedent to commencement of any other legal proceedings.

Design responsibility and Contractor’s liability

The JCT 2024 contain a new express provision clarifying that the Contractor’s liability for design shall be no greater than a duty to exercise reasonable skill and care and shall not be subject to fitness for its purpose (to the extent permitted by statute).

In addition, the wording relating to Contractor’s liability under the Defective Premises Act 1972 (“DPA”) has been expanded to include liability in respect of work for both the creation of dwellings and works to existing dwellings.

New Relevant Events and Relevant Matters

The list of Relevant Events (entitling the Contractor to an extension of time) and Relevant Matters (entitling the Contractor to loss and expense) in the DB 2024, IC 2024 and SBC 2024 have been broadened to include:

• discovery of any unexploded ordnance or unforeseen contaminated material and asbestos on the site and compliance with the Employer’s instructions in relation to any of these matters;
• epidemics impacting labour, services or materials (optional as a Relevant Matter – parties to decide whether this is applicable in the CPs);
• changes in the law, the exercise of any statutory power, or the publication of any guidance by the UK Government, any local authority, or (in the case of guidance) the Construction Leadership Council (optional as a Relevant Matter – parties to decide whether this is applicable in the CPs).

The DB 2024 now also stipulates that the Employer must request any further information as is reasonably necessary to enable it to reach a decision in relation to a notice of a delay to completion of the works given by the Contractor not later than 14 days from receipt of such notice. In addition, the time within which the Employer must assess an interim extension of time has been reduced to 8 weeks (from 12) from the later of: i) receipt of the Contractor’s particulars of notification; or ii) the further information requested from the Contractor.

The above additions to the list of Relevant Events and Relevant Matters have not been carried across to the MW 2024 (which do not contain Relevant Events/Matters), and the approach taken by the JCT to extensions of time and loss and expense remains unchanged. This is not surprising since the MW contracts are not suitable for use where detailed extension of time / loss and expense provisions are needed.

Building Safety Act

The JCT 2024 have been updated to deal with the new obligations as Principal Designer and Principal Contractor under Part 2A of the Building Regulations, including listing some of the regulations which the Contractor must comply with as a ‘Contractor’ and where they are also Principal Contractor, and a requirement to comply with the duties placed on a Principal Designer under both sets of obligations where the Contractor is fulfilling this role.

A new article has also been added allowing the parties to stipulate who will be carrying out the roles of Principal Designer and Principal Contractor under the new Part 2A of the Building Regulations.

However, no specific amendments have been made in relation to higher risk buildings, and where the Works do include works to a higher risk building, parties will need to consider what provisions need to be incorporated into the JCT (any editions) to deal with issues such as the gateway regime, the golden thread of information and mandatory occurrence reporting requirements.

Professional Indemnity insurance (“PII”)

The clause in the CPs which relates to PII has been amended to replace the previous wording referring to separate sub-limits for pollution and contamination with a wider provision allowing parties to both add details of any sub-limits within the overall cover and also any specific exclusions listed in the relevant schedules or other policy documents.

This reflects the commercial reality, particularly following the Grenfell Tower Fire, that insurers will often now include further sub-limits than just pollution and contamination and may either include a sub-limit or a complete exclusion for matters such as cladding or fire safety.

Termination

The termination provisions following suspension now allow either party to terminate the Contractor’s employment under the contract where the works have been suspended for the period specified in the CPs (2 months if not stated) due to an epidemic, or changes in law/the exercise of a statutory power/the publication of any guidance by the government, any local authority, or (in the case of guidance) the Construction Leadership Council.

Corporate Insolvency and Governance Act 2020 (“CIGA”)

The definition of ‘Insolvent’ in the JCT 2024 has been updated to capture the two additional insolvency events introduced by CIGA: standalone moratorium procedures and the compromise or arrangement procedure referred to in Part 26A of the Companies Act 2006.

However, the JCT have (surprisingly) not deleted the ability of the Contractor to terminate the contract due to the Employer’s insolvency, notwithstanding the restrictions on the ability of contractors (as ‘suppliers’) to terminate the contract for employers’ insolvency introduced by CIGA (for more information, please read our previous blog on Insolvency) Parties may wish to consider amending the termination provisions to reflect these restrictions.

Payment on termination

The JCT 2024 now include a detailed provision on how to proceed with payment following termination of the Contractor’s employment under the contract (however arising) in order to reflect the requirements under the Construction Act.

This new mechanism sets out a clear timetable of when: i) the termination payment becomes due, ii) the payment notice must be served by the Employer; iii) the final date for payment will be; and iv) the date on which a pay less notice has to be served by the Employer.

Liquidated damages (“LADs”)

The position on LADs after termination of the Contractor’s employment under the contract before practical completion has been clarified in the DB 2024. The new provision makes it clear that LADs will only apply up to the date of termination.

Tip – Should I use the JCT 2024 for my project?

 If you are considering using any of the JCT 2024 editions, we would recommend that you incorporate certain amendments such as those highlighted above to ensure that your contact complies with any statutory requirements and regulations, and good industry practice.  As we identify at the start of this article, the risk profile of the JCT 2024 is largely unchanged from the JCT 2016. It is therefore important that you consider using an up to date set of amendments.

Please talk to one of our Construction and Engineering team who can help you tailor a set of amendments to suit your project.